Omniture to Buy Visual Sciences, Furthering Consolidation

Omniture entered a definitive agreement to acquire Visual Sciences, formerly known as WebSideStory, in a stock and cash transaction valued at close to $394 million. The deal, which is expected to take several months to complete, is subject to a governmental regulatory process.

Josh James, CEO and co-founder of Omniture, said acquiring Visual Sciences will allow the analytics giant to sell a richer solution set to over 4,000 customers and to invest more aggressively in its technology and sales organization.

“It’s really around helping us to invest faster to deliver more innovation, more functionality, more capabilities to our customers,” Omniture SVP of worldwide marketing Gail Ennis told ClickZ News.

The deal is the latest in a string of Omniture acquisitions. The company acquired optimization firm Offermatica last month, behavioral targeting firm Touch Clarity in February, and enterprise Web analytics provider Instadia in January of this year. Omniture’s acquisition strategy, according to James, is three-fold: expansion into geographies where Omniture believes there is significant market potential; domestic consolidation to gain market share and operational efficiencies; and technology acquisitions to enhance the platform.

“The acquisition of Visual Sciences falls into the category of domestic consolidation,” said James. “We believe the financial analysis fully supports this acquisition and on top of the financial benefits there are other benefits such as advanced technology that can potentially enhance our overall offering.”

Jim Sterne, president of Target Marketing and board member of the Web Analytics Association, agreed. “Visual Sciences has some of the most intriguing technology out there,” he said. “On the WebSideStory side, it’s an easy merger. What WebSideStory has done, and Omniture does, will fit together well. The Visual Sciences side of the technology, that’s different. Visual Sciences has always been an outlier on the technology side.

WebSideStory acquired Visual Sciences in February 2006, and one year later took its name. In a conference call discussing the acquisition, James said Omniture had met with other acquisition targets but did not disclose which ones.

“I’ve been talking to investment bankers, all of whom were interested in what would happen to the Visual Sciences company,” said Eric Peterson, CEO and principal consultant of Web Analytics Demystified, and a former VP of Visual Sciences. He said the names of potential suitors included Yahoo, Microsoft and Oracle. “None of these made sense to me. For Omniture to take this opportunity and consolidate a large part of the market under its umbrella I think makes sense.

Is Omniture’s chain of acquisitions a sign of industry consolidation in the Web analytics space? “I think the consolidation is going to slow down, simply because there’s not a whole lot left to consolidate,” said Peterson. “Omniture acquired Instadia in Europe and now Visual Sciences, which leaves, of the big players, Core Metrics and WebTrends.”

Others disagree. “There’s been industry consolidation, and it’s not going to stop,” said Sterne. “Visual Sciences was a good company for WebSideStory to buy, the combined company was a great acquisition for Omniture.” He even went so far as to quip, “In the long run everything will be run by Microsoft or Google; we’ll just take a while to get there.”

Terms of the deal include a payout for Visual Sciences shareholders of $2.39 per share and a fixed exchange ratio of 0.49 shares of Omniture stock for each Visual Sciences share.

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